We have isolated three populations of cells with dendritic morphology of the ability to develop this morphology in peripheral blood. Two of the populations appear to be similar cells at different stages of differentiation, both of which can express the dendritic cell (DC) antigen, HB15, while the third population differs in cell surface markers and function. This third population is easily infectable with human immunodeficiency virus (HIV) while the other cells are not infectable even through all three populations express CD4. The HB15+ DC are able to bind HIV to their surfaces and when mixed with unstimulated CD4+ T cells transfer this virus and initiate an active infection. This infection appears dependent on endogenous cytokines and can be modulated by exogenous cytokines or cytokine modulators. Our data suggest a model for the initiation of HIV infection where DC bind virus, transport it to lymphoid areas, and through activating T cells, initiate a productive infection. Understanding the early events in HIV infection may allow us to develop therapies that may interfere at the earliest stages of infection prior to significant damage to the immune system.